Home prices in Toronto have fallen 19 per cent since the market's peak in April, sliding further in July as buyers continued to sit on the sidelines while waiting for signs of stability.
The Toronto Real Estate Board reported the average price of all types of homes sold in the Greater Toronto Area hit $746,218 in July, down 19 per cent from the market's peak in April when house sales averaged $920,791, and down 6 per cent from June's average selling price of $793,915.
The average July sales price was still up 5 per cent compared to July last year, which means the market downturn has still not erased the full amount of the price gain recorded in late 2016 and early 2017.
Canada's housing experiment: How a year of reform has changed the market
Read more: Toronto home-price downturn? Not in these neighbourhoods
Bank of Montreal economist Sal Guatieri said detached home prices are falling faster in greater Toronto than they did in Vancouver last year after the B.C. government imposed a tax on foreign buyers. Detached home prices have dropped 8 per cent in two months in the GTA, he said, compared to a 6.4-per-cent decline over a six-month period in Vancouver.
The recent price drop came as the number of homes sold fell 40.4 per cent in July compared to the same month last year, TREB said. The number of detached home sales fell 47.4 per cent during the month, while sales of semi-detached houses fell 38.6 per cent, townhouse sales dropped 36.5 per cent and condo sales slid 30.7 per cent.
"There's nothing positive – there are no really great signs out there," said realtor John Pasalis, president of Realosophy Realty Inc. in Toronto.
Mr. Pasalis said some of areas where average prices are now lower than they were a year ago – including Richmond Hill and Whitchurch-Stouffville north of Toronto – are also regions that appeared to have the highest number of speculators and foreign buyers prior to the downturn. Their withdrawal from the market has had a greater impact on prices than in more central neighbourhoods in the City of Toronto.
However, Brian Elder, an agent at Royal LePage Real Estate Services Ltd. in Toronto, said he believes the current market is healthier than before, and many houses are still selling quickly.
He said he worked with clients last week on four deals that received multiple offers and sold over the asking price. Other sellers, however, haven't received any offers at their asking price and have taken their houses off the market.
"To say prices are plummeting or the market is collapsing is so premature – I don't believe that by any stretch. I think it's actually a great time to be buying, especially if you're looking at a single-family property," he said. "It's just a normalized market. It's becoming more balanced, which is what everybody wants."
Amid the steep decline in sales, the only modest sign of market improvement came from the slowing pace of growth in the number of new homes listed for sale, which rose 5.1 per cent in July compared to last July. New listings surged by 49 per cent in May and 16 per cent in June compared to the same months last year as many homeowners rushed into the market to try to sell at the peak, leading to a glut of inventory and falling prices.
Royal LePage realtor Shawn Zigelstein, who is based in Richmond Hill, believes August will remain quiet, but there will be a significant increase in new listings in September. He predicts sellers will be more "serious" about completing a deal in the fall, while people who are toying with the idea of selling and holding out for prices above current market levels will leave the market.
"Anybody who's really kicking tires in the market will come off the market some time in August, and then in September we'll start to see those serious sellers come back on," Mr. Zigelstein said. "I think it will be substantially more than what we're going to see in August."
TREB said detached houses have led the region's housing downturn, especially in the suburban 905 area surrounding the City of Toronto.
Detached house prices were up just 2.4 per cent in the 905 region in July compared to a year ago, but are still up 8.5 per cent in the City of Toronto, TREB said. The number of detached houses sold in July dropped 49 per cent in the 905 region and 41.7 per cent in the City of Toronto.
Condo prices have held up better due to their relative affordability for first-time home buyers. TREB said the average condo sale price in the GTA was still up 23 per cent in July compared to a year earlier, while detached and semi-detached house prices were both up about 5 per cent compared to July, 2016.
Mr. Pasalis said he believes condo prices will begin to slide lower given the drop in house prices.
"Condo prices can only go so high while freehold [house] prices are declining. It doesn't make sense – price appreciation will level off," he said.
The Toronto market has seen house sales slide since the Ontario government announced a package of reforms on April 20 aimed at cooling rapid growth in house prices in the region. The centrepiece of the plan was a new 15-per-cent tax on foreigners buying homes in the Toronto area.